Sugarbowl Flashcards
(458 cards)
1
Q
What is the chemical symbol for copper?
A
Cu
2
Q
What are the trading platforms for copper?
A
LME, COMEX, SHFE
3
Q
What is the average annual production of copper?
A
~21 million tonnes per year
4
Q
Which countries are the largest producers of copper?
A
- Chile
- Peru
- China
- US
- Australia
5
Q
What are the common uses of copper?
A
- Electrical wiring
- Plumbing
- Telecommunications
- Renewable energy technologies
6
Q
What is the closing time for copper ring trading?
A
12:30-35
7
Q
When does the end of day valuation for copper occur?
A
16:45-50
8
Q
Who are the biggest companies involved in copper trading?
A
- Glencore
- Trafigura
- Freeport
- BHP
9
Q
What factors influence copper prices?
A
- Global economic conditions
- Electricity prices
- Geopolitical events
10
Q
What was the main event involving Yasuo Hamanaka in 1996?
A
Attempted to corner the copper market by manipulating futures contracts.
11
Q
What was the financial impact of Yasuo Hamanaka’s actions?
A
$2.6 billion losses for Sumitomo Corp.
12
Q
What nickname was given to Yasuo Hamanaka?
A
Mr. Copper
13
Q
What percentage of all LME copper warrants did Hamanaka control at one point?
A
93%
14
Q
What actions did the CFTC take in response to Hamanaka’s activities?
A
Started to investigate suspicious warehouse movements.
15
Q
Fill in the blank: The largest warehouse locations in use for copper include _______.
A
Port klang, Kaohsiung, Rotterdam, Gwangyang, Busan, Singapore, Hamburg
16
Q
True or False: Copper is the most traded metal in the world.
A
True
17
Q
What were the consequences of Hamanaka’s confession on June 5, 1996?
A
LME revised membership categories and reporting requirements.
18
Q
What does ALU stand for?
A
Aluminum
Commonly used in various industries.
19
Q
What are the common industries for ALU?
A
Aviation, automotive, construction, and packaging.
20
Q
What is the weight of a standard lot in ALU trading?
A
25 Tonnes per Lot.
21
Q
What are the 2nd ring and end of day times for Alu valutions
A
13:00 (prim.), 12:40 (Alloy), 16:25-30 / 15:55-16:00.
22
Q
Who are the biggest companies in the ALU market?
A
Glencore, Trafigura, Royce, Gerald.
23
Q
What influences ALU prices?
A
Global economic conditions, electricity prices, geopolitical events.
24
Q
What are the main trading platforms for ALU?
A
LME, COMEX (New York Mercantile Exchange), and SHFE (Shanghai Futures Exchange).
25
Who are the largest producers of ALU?
China, India, Russia, Canada, and the US.
26
What is the annual production of ALU?
~ 64 million tonnes per year.
27
What is NASAAC?
North American Special Aluminum Alloy Contract.
28
What is unique about the LME's first regionally focused contract?
It is based in the automotive industry (GM).
29
What is the difference between nasaac and standard alloy contracts?
Nasaac has different metallurgical specifications from the standard alloy contract.
30
Where are the warehouses for nasaac and standard contracts located?
Nasaac: American warehouses; standard has mostly Italian/EU warehouses.
31
What is the weight of a lot in Nasaac?
20 tonnes in ALot.
32
What is the composition of ALU alloys?
Contains 13.3 - 18.55% of other materials (86.7 - 81.45% ALU).
33
What additional costs do buyers pay for physical ALU Premium?
Factors include transportation, regional supply & demand, and delivery terms.
34
What were the stock numbers on 31.12?
634,650 close, 289,575 warrants.
35
What are the abbreviations for nickel?
NID, NIE, NIS, NIY
36
What is the standard lot size for nickel trading?
6 Tonnes per Lot
37
What are the 2nd Ring trading hours for nickel?
13:00 - 13:05
38
Who are the biggest companies in the nickel market?
Glencore, Trafigura, 3HP, Vale SA
39
What are the primary uses of nickel?
Mostly used in stainless steel production and battery manufacturing (electric vehicles)
## Footnote
Increasing demand
40
Which countries are major producers of nickel?
Indonesia, Philippines, Russia
41
What is the estimated production of nickel per year?
~3.6 million tonnes per year
42
What factors influence nickel prices?
Global economic conditions, technological advancement, government politics
43
What was the nickel crisis of 2022?
Concerns over supply disruptions in Russia due to western sanctions led to a rush to cover short positions, causing prices to rise to $100,000 per tonne.
## Footnote
LME stopped nickel trading and canceled trades due to several companies defaulting on margin calls, resulting in legal battles.
44
What were the closing stock figures for nickel on December 31?
162,474 close, 150,648 warrants
45
What is the Abbreviation used for Tin?
SND/SNE/SNS/SNY
46
What are the main uses of tin?
Used in soldering, plating, tin can production, and food storage.
47
What industries influence the supply and demand of tin?
The electronics and food packaging industries influence supply and demand.
48
What are the biggest producers of tin?
The biggest producers are China, Indonesia, Myanmar, Malaysia, and Brazil.
49
What is the estimated production of tin?
Approximately 290 k tonnes per year.
50
What was the closing price of tin stocks on December 31?
The closing price was 4630.
51
What is the time for tin 2nd ring & kerb?
Trading occurs between 12:40 - 12:45 and 16:05 - 10.
52
What are some of the biggest companies involved in tin production?
Yunnan, Minsur, MSC, and Timah are major companies in tin production.
53
What does LEAD stand for?
PBD, PBE, PBS, PBY
54
Whatare the biggest lead companies?
Glencore, Trafigura, BHP, RI, Nyrstor
55
What is the typical lot size for lead?
25 Tonnes per Lot
56
What are the key time periods for lead trading? (2nd ring & kerb)
12:45 - 12:50 and 16:55 - 17:00
57
Who are the biggest producers of lead?
China, Australia, Russia, US, Peru
58
What percentage of lead production comes from the top producer and who is it?
57%, china
59
What is the annual production of lead?
~11.9 million tonnes per year
60
What are the stock figures for lead as of 31.12?
242200 close
61
What is the warrant figure for lead in 2025?
202525 warrant
62
What is the main use of zinc?
Mainly used in galvanising steel and iron to prevent corrosion, die-casting for automotive & electrical industries, production of alloys (brass), batteries, paints, and medical applications.
63
What are the biggest producers of zinc?
China, Peru, and Australia.
## Footnote
Biggest producer: ~12.3m t.p.y.
64
What is the ring closing time for zinc?
12:50 - 12:55.
65
What is the end of day valuation time for zinc?
16:35 - 40.
66
What is the stock closing value for zinc on 31.12?
234100 close, 171450 warrant.
67
What are the zinc codes?
ZSD, ZSE, ZES, ZSY.
68
What is the typical lot size for zinc?
25 Tonnes per Lot.
69
Who is the major consumer of zinc?
China is both a major producer and consumer.
70
What is Initial Margin?
Initial calculation of risks inherent to a position. Required to open a position.
## Footnote
Covers realised P&L from Trade Date to Default.
71
What does SPAN stand for?
Standard Portfolio Analysis of Risk, which evaluates futures and options to determine worst case loss scenario.
72
What is Variation Margin?
Also known as maintenance margin, it is a daily mark-to-market calculation based on closing price. If there is a fall in value, the margin must be 'topped up' through a margin call.
## Footnote
Profit cannot be removed before the prompt date and covers potential future losses.
73
What is Additional Margin?
Accounts for risks outside of SPAN, especially for large or innovative/unusual positions.
## Footnote
Includes net (neg) IM exposure, net VM exposure, and ledger balance.
74
What are the components of Additional Margin?
1. Concentration AM
2. Default fund AM
3. Credit AM
4. Discretionary AM
## Footnote
Covers potential future losses.
75
What is Total Margin?
The sum of Initial Margin, Variation Margin, and Additional Margin.
76
What is a margin call?
A request to top up the margin when the value falls below the required level.
77
What is the scanning range example for Copper?
Check margin parameters! Published every month. For a client wanting to hedge 20 lots (500 tonnes) of copper, the initial margin required is $317,000 ($634 x 500 tonnes) upfront to open this position.
78
What is inter-prompt risk?
The measure of risk between positions on different dates (or 'prompts' in LME parlance).
79
What does the methodology for inter-prompt risk incorporate?
The relationship between spread level and forward volatility.
80
What are Trading Position Limits (TPL)?
TPL is measured against Initial Margin (IM) exposure.
81
How is Trading Position (TP) defined?
Trading Position equals Initial Margin.
82
What is the formula for Trading Position Limits (TPL)?
TPL = IM Credit Line + VM Credit Line.
83
What does Ledger Balance refer to?
Ledger Balance includes Cash Balance.
84
How can Cash Balance be utilized?
Cash Balance can be used against Margins.
85
What is Net Cash Equity?
Net Cash Equity is calculated as the sum of negative IM, UM, outstanding Commission, and Fees.
86
What is the interest on credit line usage?
NCE SOFA + markup interest on credit line usage.
87
What is the standard MaRK uP?
Standard MaRK uP is 150 Basis Points (-1.5%).
88
What does SoFR stand for?
SoFR stands for Secured Overnight Financing Rate.
89
What is TriX?
Trilands own trading platform.
90
What functionalities does TriX provide?
Request quotes, APC, dealers, FX, place trades, futures, averaging, swaps, and ring orders.
91
What are the operating hours of TriX?
From 1 AM to 10 PM.
92
What is CM2?
Also known as 'The Matrix', it is an operations trade matching tool.
93
What does CM2 feed into?
LME Select.
94
What is the purpose of the Order Stack?
It is referred to as 'The bible' for input and management of orders.
95
What does Direct Market Access provide?
24 hours access to LME live prices.
96
What is EiKon?
It provides financial analysis and data services.
97
What additional feature does EiKon include?
Chatrooms.
98
What is the main frustration of physical/industrial clients?
They feel there is small relevance to the LME ecosystem.
99
Who are the priorities of the LME focused on?
Hedge funds, money managers, CTAs, and speculators.
100
What is the impact of new block limits on small trades?
They are designed to modernize the market but can marginalize smaller (physical) traders.
101
What is required for small trades under the new limits?
Small trades have to be traded on-screen, which means no anonymity.
102
What is the block trade threshold for LME?
10 lots.
103
What do trading fees vary based on?
They vary depending on contract type, ring, etc.
104
What are clearing fees associated with?
They are associated with executing trades through LME Clear.
105
What does the annual service subscription provide?
Access to LME services and data.
106
What are membership fees related to?
They are related to maintaining an account with LME.
107
What do warehouse fees cover?
They cover storing and managing physical metal.
108
What are OTC booking fees for?
They are for booking over-the-counter trades.
109
What is the Official Settlement?
The last cash offer price made in the ring.
110
What are Official prices?
Last bid and offer prices quoted.
111
What is the significance of Official Settlement prices?
They serve as the official reference global for physical contracts.
112
What is the price at which all LME futures are settled?
The Official Settlement price.
113
What are the Ring Times for Copper?
12:30 - 35.
114
What are the Ring Times for Alloy?
35 - 40.
115
What are the Ring Times for Tin?
40 - 45.
116
What are the Ring Times for Lead?
45 - 50.
117
What are the Ring Times for Zinc?
50 - 55.
118
What are the Ring Times for Aluminum?
55 - 00.
119
What are the Ring Times for Nickel?
13:00 - 05.
120
What are the Kerb times for Cobalt?
15:50 - 55.
121
What are the Kerb times for Alloy/Nasaac?
55 - 00.
122
What are the Kerb times for Tin?
16:05 - 10.
123
What are the Kerb times for Nickel?
15 - 20.
124
What are the Kerb times for Flu?
25 - 30.
125
What are the Kerb times for zinc?
35 - 40.
126
What are the Kerb times for Copper?
45 - 50.
127
What are the Kerb times for Lead?
55 - 60.
128
What are Valuations?
Closing prices discovered through IME select trading activity during the end of trading day.
129
What methodologies are used for margin calculations and risk management?
VWAP and last price metrology.
130
From what are precious metals a byproduct of?
Bauxite, bornite, Chalcopyrite, scrap metals.
131
In which copper ores are precious metals byproducts?
Bornite and Chalcopyrite are byproducts of copper ores.
132
How does the precious metals market compare to LME?
The precious metals market is much freer than LME, providing good earning opportunities.
133
What are some uses of precious metals?
Precious metals are sometimes added to electrical copper wiring, brass/bronze alloys, and for plating.
134
What benefits do precious metals provide when added to materials?
They improve conductivity, durability, strength, wear, and corrosion resistance.
135
What is a Repurchase Agreement (Repo)?
A Repo is a transaction where a seller surrenders metal for a period of time and agrees to buy it back at a higher price, representing interest or cost of financing.
136
What is a positive aspect of using Repos?
Firms do not have to draw on credit lines from banks and can trade higher volumes.
137
What is a negative aspect of using Repos?
There is one-sided risk and potentially high premiums or interest rates.
138
What are the steps in how a Repo works in Base metals?
1. Initial Sale: The seller sells metal to the buyer at a discounted price for immediate cash. 2. Repurchase Agreement: The seller agrees to buy back the same metal at a future date for a higher price.
139
What is one reason for using Repos in Base metals?
Liquidity management: Provides immediate cash flow to companies holding significant physical metal inventories.
140
How do Repos provide low-cost financing?
Repos often have lower interest rates compared to other forms of short-term borrowing because the physical metal acts as collateral.
141
What is an efficient use of metal inventory with Repos?
Allows holders of metal inventories to monetize their assets without permanently selling them.
142
How can Repos be used for hedging and arbitrage?
Traders can finance arbitrage opportunities between physical and futures markets and hedge against short-term price volatility.
143
What is the risk management benefit for lenders in a Repo?
The lender is protected because the physical metal acts as collateral, reducing credit risk.
144
What is the difference between OSA and House accounts?
OSA accounts provide client asset protection, while House accounts do not.
## Footnote
OSA accounts must comply with Mifid & ECA Cass Rules to protect clients.
145
What does 'segregated' mean in the context of accounts?
'Segregated' refers to a buffer or protection for client assets.
## Footnote
It ensures that client assets are kept separate from the firm's own assets.
146
What is the meaning of 'long' in trading?
'Long' means to buy an asset in anticipation of its price increasing.
## Footnote
Long positions are typically associated with bullish market sentiment.
147
What is the meaning of 'short' in trading?
'Short' means to sell an asset in anticipation of its price decreasing.
## Footnote
Short positions are typically associated with bearish market sentiment.
148
What is the purpose of margin in trading?
Margin is required to cover potential losses on leveraged positions.
## Footnote
It is necessary for short positions, as money needs to be deposited.
149
What does 'COB IM' stand for?
COB IM stands for Close of Business Initial Margin.
## Footnote
It represents the funding required for positions.
150
What is the net position change today for OSA?
The net position change today for OSA is +50, totaling $0.9m.
## Footnote
This reflects an optimal needle of 1.7%.
151
What is the net position change today for House?
The net position change today for House is +50, totaling $2.8m.
## Footnote
This reflects a desired needle of 1.4%.
152
What are the revenue streams in the warrants department?
1. Trading of warrants
2. Brokerage services
3. Premium Arbitrage
4. Storage and Load-out Management
5. Financing Arrangements
6. Hedging and Risk Management services
7. Consultation on stock Financing
8. Warrant Transfers
153
What are backwardation opportunities in the warrants market?
In a backwardated market (spot prices higher than futures prices), traders may deliver physical metal to gain from higher spot prices.
154
What are contango opportunities in the warrants market?
In contango markets (futures prices higher than spot), warrants are held or traded to take advantage of future premiums.
155
What is location arbitrage in the context of warrants?
Warrants in certain locations may trade at a higher premium due to high demand or storage constraints. Triland might facilitate such trades for a profit.
156
What is spatial arbitrage?
Buying in one market and selling in another market, where the price is higher.
157
What is temporal arbitrage?
Using data and statistics over time to exploit price differences.
158
What is the commission policy for carries of less than 14 days?
No commission with carries of less than 14 days.
159
What is the commission policy with TriO +Stack combos?
No commission with TriOF Stack.
160
What is the commission policy with Tom next?
No commission with Tom next.
161
What does 'TB B' stand for?
TB B = to be billed
Billing will take care of it (same with percentages 1/64)
162
What is ITP GROSS?
ITP GROSS is in the price before commission applied.
Give net to to dealer then give brutto to client
163
What is ITP NET?
ITP NET is 'Built in Commission'. Price that clients give is brutto so we need to work out net to to give to dealer
164
How can you make it more expensive for the customer?
Add or subtract commission.
165
What is the commission adjustment for Borrow in Contango?
Subtract commission.
166
What is the commission adjustment for Borrow in Backward?
Add commission.
167
What is the commission adjustment for Lend in Contango?
Add commission.
168
What is the commission adjustment for Lend in Backward?
Subtract commission.
169
Provide an example of ITP gross and commission.
ITP gross: 31c, 0.5 com., borrow.
## Footnote
Example: 31 - 0.5 = 30.5C
170
Provide an example of ITP net.
ITP net: dealer netto order brutto
## Footnote
Example: 5c - 0.5 com = 4.5c; 6c + 1$ com = 7c.
171
What does 'Carries' refer to in trading?
Simultaneously buy and sell the same amount but with different prompt dates.
172
What are the two kinds of Carries?
Lend and Borrow.
173
What does Lend involve?
Sell near, buy fast.
## Footnote
Sell the earliest prompt date and buy the later prompt date.
174
What does Borrow involve?
Buy near, sell far
## Footnote
Buy the earliest prompt date and sell the later prompt date.
175
What is the action associated with 'Lend'?
Delay.
176
What is the action associated with 'Borrow'?
Advance.
177
What are the categories of LME members?
Cat 1, Cat 2, Cat 3, Cat 4, 5, 6
## Footnote
These categories represent different types of membership within the London Metal Exchange.
178
Which companies are classified as Cat 1 members?
Clear Street, AMT, Marex, Sucden, StoneX
## Footnote
Cat 1 members have full access to the LME ring and can trade for their own account and for clients.
179
Which companies belong to Cat 2?
Triland, Nanhua, RJ O'Brien, Banks, Mitsui, Hydro
## Footnote
Cat 2 members have no ring access but can trade for their own account and for clients.
180
What is the trading capability of Cat 3 members?
Only trade for own account
## Footnote
Cat 3 members do not have access to ring trading.
181
What is the status of Cat 4 members?
Non-clearing member, need to use services of Cat 1/2 to clear trades
## Footnote
Cat 4 members do not clear trades independently.
182
Who are classified as category 5 members?
Non-trading members who wish to be associated with LME brand
## Footnote
These members do not engage in trading activities.
183
What defines category 6 members?
Honorary members, private individuals
## Footnote
Category 6 members have a special status within the LME.
184
What access does Cat 1 members have?
Access to ring, trade for own account and for clients
## Footnote
This access allows for broader trading opportunities.
185
True or False: Cat 2 members can only trade for their own account.
False
## Footnote
Cat 2 members can trade for both their own account and for clients.
186
Fill in the blank: Cat 3 members can _______.
only trade for own account
## Footnote
They do not have access to ring trading.
187
What is a long position in metal trading?
A trader buys a metal with the expectation that its price will rise in the future
## Footnote
The trader aims to sell the metal later at a higher price to make a profit. This is considered a bullish strategy, anticipating market growth.
188
What is a short position in metal trading?
Selling a metal that the trader does not currently own, intending to buy it back later at a lower price
## Footnote
Traders borrow the metal from a broker to sell it, hoping to profit from a decline in its price. This is a bearish strategy, betting on market decline.
189
What is the primary goal of taking a long position?
To sell the metal later at a higher price to make a profit
190
What is the primary goal of taking a short position?
To buy back the metal later at a lower price after selling it
191
True or False: A long position is a bearish strategy.
False
192
True or False: A short position expects the market to decline.
True
193
Fill in the blank: A long position is a _______ strategy.
bullish
194
Fill in the blank: A short position is a _______ strategy.
bearish
195
What do both long and short positions aim to achieve?
To profit from market movements
196
What metals might a trader take long or short positions in?
Gold, silver, copper
197
What are the deliverable shapes for Nickel in LME?
Cathodes (full plate and cut), Pellets, Briquettes, Rounds
## Footnote
Nickel can be delivered in various forms depending on the market requirements.
198
What is the lot size for Aluminium in LME?
25 tonnes
## Footnote
This is the minimum quantity for trading in the LME market for Aluminium.
199
What is the warrant size for Zinc in LME?
25 tonnes ($2%)
## Footnote
The warrant size indicates the amount of metal that can be delivered against a warrant.
200
What is the deliverable shape for Lead in LME?
Ingots
## Footnote
Lead is commonly traded in the form of ingots in the LME market.
201
What is the lot size for Tin in LME?
5 tonnes
## Footnote
This is the minimum quantity for trading in the LME market for Tin.
202
What are the deliverable shapes for Copper in LME?
Broken Cathodes, Briquettes
## Footnote
These shapes are typical forms in which Copper can be delivered.
203
What is the lot size for Cobalt in LME?
1 tonne
## Footnote
Cobalt has a smaller trading unit compared to other metals.
204
What type of contract is used for Molybdenum in LME?
Cash settled
## Footnote
This means that transactions are settled in cash rather than physical delivery.
205
What is the lot size for Aluminium Alloy in LME?
20 tonnes
## Footnote
This is the minimum quantity for trading in the LME market for Aluminium Alloy.
206
What is the warrant size for Nickel in LME?
6 tonnes (+2%)
## Footnote
The warrant size specifies the allowed variation in delivery quantities.
207
Fill in the blank: The deliverable shapes for Molybdenum in LME include _______.
Ingots, Small Sows, Large Sows, T-bars
## Footnote
Molybdenum can be delivered in various forms, depending on the market.
208
True or False: The warrant size for Tin is 5 tonnes with a +2% variation.
True
## Footnote
This indicates the specific rules for trading Tin in the LME.
209
What is the Initial Margin (IM)?
The amount of collateral (cash or securities) that a trader must deposit with the clearinghouse or broker when entering a derivatives position.
210
What is the purpose of the Initial Margin?
To protect the clearinghouse or broker from default risk by ensuring the trader has enough collateral upfront.
211
How is the Initial Margin set?
Determined based on the riskiness of the asset, the volatility of the market, and the size of the position.
212
What are common risk models used to calculate Initial Margin?
* SPAN (Standard Portfolio Analysis of Risk)
* VaR (Value at Risk)
213
Is the Initial Margin a one-time deposit?
Yes, it is paid once when the trade is initiated but may be adjusted if market conditions change.
214
Fill in the blank: The Initial Margin is often expressed as a _______ of the notional value of the contract.
[percentage]
215
Provide an example of Initial Margin calculation.
If a trader enters a futures contract worth $100,000 and the initial margin requirement is 10%, they must deposit $10,000 as collateral.
216
What does variation margin refer to?
Additional funds that traders must deposit (or can withdraw) to account for daily market fluctuations in the value of their open positions.
217
What is the purpose of variation margin?
To ensure that the account always holds enough collateral to cover current losses, maintaining the integrity of the trading system.
218
What is the mark-to-market (MTM) process?
At the end of each trading day, the clearinghouse calculates the profit or loss of each position based on the day's price changes.
219
What happens if a position loses value in relation to variation margin?
The trader must deposit additional funds (a margin call) to maintain the required margin.
220
What can a trader do if their position gains value?
They may withdraw excess funds.
221
How does variation margin impact unrealized profits and losses?
Variation margin ensures that unrealized profits and losses are realized daily, preventing accumulation of large losses over time.
222
Fill in the blank: A trader holds a futures contract that loses $2,000 in value in a single day. The clearinghouse will issue a _______ , requiring the trader to deposit $2,000 to maintain the position.
margin call
223
What role does initial margin play in trading?
It protects the clearinghouse against potential default when a position is established.
224
What does variation margin ensure regarding positions?
It ensures that positions are constantly collateralized to reflect real-time market conditions, reducing systemic risk.
225
What does LME stand for?
London Metal Exchange
226
What is the purpose of the fees charged by the LME?
To cover operating costs and maintain a fair and transparent market
227
What are Trading Fees?
Fees applied to transactions executed on the LME, charged per contract traded
228
What do Clearing Fees cover?
Costs of risk management, margining, and ensuring financial security of trades
229
Who pays Membership Fees?
Brokers, dealers, and clearing members to maintain their membership status
230
What do Market Data Fees include?
Fees for accessing LME's price data, indices, and market reports
231
What is the purpose of Warehouse Fees?
To cover rent, delivery, and load-out charges for storing metals
232
What services do Administrative Fees cover?
Services such as position transfers, collateral management, and account changes
233
Fill in the blank: LME Clearing Fees are charged for clearing trades through _______.
LME Clear
234
True or False: Membership Fees at the LME have a uniform fee structure for all members.
False
235
What are the main reasons for charging LME Fees?
* Operational Costs
* Market Integrity
* Infrastructure Maintenance
* Revenue for the Exchange
* Service Accessibility
236
What is the purpose of Trading Fees?
To cover costs of facilitating trades and maintaining the trading platform
237
What type of fees are charged for accessing real-time data and historical data?
Market Data Fees
238
What do Warehouse Fees support?
The physical infrastructure of the LME's global warehousing network
239
Fill in the blank: Administrative Fees cover _______ and administrative costs.
operational
240
What is the LME's approach to revenue generation?
As a for-profit entity, it generates revenue through fees
241
What is the purpose of Membership Fees?
To support infrastructure and services provided to members
242
What is a Repo in the base metals industry?
A short-term financing arrangement where one party sells metal to another with an agreement to repurchase it at a later date for a predetermined price.
243
What is the purpose of a Repo in base metals?
To secure liquidity or manage short-term financing needs.
244
Describe the initial sale process in a Repo.
The seller sells metal to the buyer, typically at a discounted price, providing immediate cash to the seller.
245
What happens in the repurchase agreement of a Repo?
The seller agrees to buy back the same quantity and quality of metal at a future date for a higher price.
246
What does the price difference in a Repo represent?
The interest or cost of financing.
247
List two reasons for using Repos in base metals.
* Liquidity management
* Low-cost financing
248
How do Repos assist in liquidity management?
They provide immediate cash flow to companies holding significant physical metal inventories.
249
Why are Repos considered low-cost financing?
They often have lower interest rates compared to other forms of short-term borrowing because the physical metal acts as collateral.
250
What is one benefit of using Repos for metal inventory?
Allows holders to monetize their assets without permanently selling them.
251
How can traders use Repos for hedging?
Traders can finance arbitrage opportunities between physical and futures markets and hedge against short-term price volatility.
252
What protects the lender in a Repo agreement?
The physical metal acts as collateral, reducing credit risk.
253
What happens if the seller defaults in a Repo?
The lender retains the metal, which can be sold to recover funds.
254
What are the advantages of using Repos?
* Flexibility
* Speed
* Low risk
255
Fill in the blank: Repos provide quick access to _______ compared to traditional loans.
[liquidity]
256
What are the challenges and risks associated with Repos?
* Collateral risk (margin call)
* Price risk
* Storage and delivery costs
* Counterparty risk
257
True or False: Repos are only beneficial for sellers in the base metals industry.
False
258
What is one risk if the value of the metal decreases significantly?
The buyer may require additional collateral.
259
What costs need to be factored into the Repo agreement?
Storage and delivery costs for physical metals.
260
Repos help balance cash flow by leveraging _______.
[metal inventories]
261
What is the lot size for Aluminium contracts?
25 metric tonnes
262
What is the lot size for Alumina contracts?
50 metric tonnes
263
What is the lot size for Cobalt contracts?
1 metric tonne
264
What is the lot size for Copper contracts?
25 metric tonnes
265
What is the lot size for Lead contracts?
25 metric tonnes
266
What is the lot size for Lithium Hydroxide contracts?
1 metric tonne
267
What is the lot size for tin contracts?
5 mt
268
What is the lot size for Nickel contracts?
6 metric tonnes
269
What is the lot size for Zinc contracts?
25 metric tonnes
270
What is the lot size for Steel Billet contracts?
65 metric tonnes
271
What is the lot size for Steel Rebar contracts?
10 metric tonnes
272
What is the lot size for Steel Scrap contracts?
10 metric tonnes
273
What is the current outright daily price limit for LME Aluminium?
12%
274
What is the current outright daily price limit for LME Copper?
12%
275
What is the current outright daily price limit for AME Zinc?
15%
276
What is the current outright daily price limit for LME Nickel?
15%
277
What is the current outright daily price limit for LME Lead?
15%
278
What is the current outright daily price limit for LME Tin?
15%
279
What is the current outright daily price limit for LME Aluminium Alloy?
15%
280
What is the current outright daily price limit for LME NASAAC?
15%
281
What is the current outright daily price limit for LME Cobalt?
15%
282
True or False: The current outright daily price limit for LME Cobalt (Fastmarkets MB) is 15%.
True
283
Fill in the blank: The lot size for Lithium Hydroxide contracts is _______.
1 metric tonne
284
What does a 'carry' in metals trading mean?
A carry involves simultaneously buying and selling the same quantity of metal at different prompt dates to extend or shorten the position.
285
In a carry, what does it mean to 'lend'?
Lending means selling near and buying far — selling the earlier prompt date and buying the later one.
286
What is the difference between Contango and Backwardation?
Contango is when future prices are higher than spot; backwardation is when future prices are lower than spot.
287
What are the implications of Contango for buyers?
Contango is more expensive for buyers as they pay a premium for future delivery.
288
What does 'ITP' stand for and what does it mean?
ITP stands for 'In The Price', meaning the commission is already embedded in the trade price.
289
What does 'TBB' stand for and what does it indicate?
'To Be Billed' – the commission is calculated separately and added later, often clear in records or back-office systems.
290
What does NCE stand for and how is it calculated?
Net Client Equity = Sum of negative Initial Margin, Variation Margin, outstanding commissions & fees minus the ledger balance.
291
What happens if a client's margin falls below Variation Margin at COB?
It breaks their credit line, prompting a margin call from the credit team.
292
What is the 'Prompt Date' in metals trading?
The date on which the physical delivery or settlement of the metal is due.
293
What is 'Averaging' in QP (Quotational Period) trading?
It's the process of pricing a trade based on an average of daily prices over a defined period to smooth out volatility.
294
What does 'OSA' stand for in clearing accounts?
Omnibus Segregated Account – holds client positions separated from the firm's proprietary positions for regulatory protection.
295
What is the role of Tri-O at Triland?
It’s Triland’s order management system for storing and executing user orders, especially for the 2nd ring close.
296
What is the function of the Order Stack system at Triland?
Used to input and manage the flow of client orders; visible to Account Executives and dealers.
297
What is the function of 'OptVal' at Triland?
A risk management tool used to monitor and evaluate risk exposures, including client strategies.
298
What is 'CM2' used for?
It's an operations trade matching tool that integrates with LMEsmart for clearing purposes.
299
What are non-ferrous metals?
Metals that do not contain iron and are not magnetic, e.g. copper, aluminium, zinc, tin, nickel, lead.
300
What is copper mainly used for?
Electrical wiring, plumbing, telecommunications, and renewable energy technologies.
301
Why is copper demand high?
Due to industrial growth, especially in developing regions like China.
302
What are the biggest producers of copper?
Chile, Peru, China, USA, and Australia.
303
What are some key properties of aluminium?
Lightweight, corrosion-resistant, used in transport, packaging, and construction.
304
What is zinc mainly used for?
Galvanising steel and iron, die-casting for automotive and electrical industries, battery and paint production.
305
What are major zinc producing countries?
China, Peru, Australia.
306
What is nickel primarily used for?
Stainless steel production, alloys, batteries for electric vehicles.
307
What are key uses of lead?
Lead-acid batteries, shielding against radiation, weights, and solders.
308
What is tin used for?
Soldering, plating, and in various alloys.
309
What is the LME?
London Metal Exchange – the world’s premier base metals futures and options exchange.
310
What trading platforms does the LME use?
LME Select (electronic), Ring trading (open outcry), and telephone trading.
311
What is a Ring Dealing Member?
A broker authorized to trade in the Ring, via LMEselect and phone, and clear trades (e.g., Triland).
312
What is the difference between Category 1 and Category 2 LME members?
Category 1 can trade in the Ring; Category 2 can trade electronically and by phone but not in the Ring.
313
What types of clients does Triland have?
Producers, consumers, merchants, hedge funds, and industrial users.
314
What is Triland's role in the market?
A broker and dealer providing trading access, credit lines, hedging strategies, and logistics support.
315
What is a warrant in LME trading?
A title document representing a specific quantity of metal stored in an LME-approved warehouse.
316
What is a carry trade?
Buying and selling the same quantity of metal at different prompt dates to profit from the spread.
317
What is the prompt date?
The agreed date on which delivery or settlement of the trade occurs.
318
What is Initial Margin (IM)?
Collateral required upfront to enter a position, protecting against default.
319
What is Variation Margin (VM)?
Daily gains or losses due to market movement, settled daily to reflect MTM value.
320
What is SPAN?
Standard Portfolio Analysis of Risk – a model used to calculate margin requirements.
321
What is NCE?
Net Client Equity – the equity available to a client after accounting for IM, VM, fees, and commissions.
322
What is TPL?
Trading Position Limit – the sum of a client’s IM and UM credit limits.
323
What does Tri-X do?
Triland’s proprietary trading system for managing and executing client orders.
324
What is Tri-O used for?
Order management for storing and routing Triland client trades, especially around 2nd ring close.
325
What is a 'Tom-Next'?
A carry between tomorrow and the next day, used for short-term adjustments.
326
What is 'Rolling' in metals trading?
Adjusting a position’s prompt date by trading out and back in with different maturities.
327
What is 'Contango'?
Market condition where futures prices are higher than spot prices.
328
What is 'Backwardation'?
Market condition where futures prices are lower than spot prices.
329
What is the difference between 'Borrow' and 'Lend'?
Borrow = Buy near, Sell far; Lend = Sell near, Buy far.
330
What is 'In The Price' (ITP)?
Commission is included in the trade price.
331
What is 'To Be Billed' (TBB)?
Commission is not included in the price and is billed separately.
332
What does a 'carry' in metals trading mean?
A carry involves simultaneously buying and selling the same quantity of metal at different prompt dates to extend or shorten the position.
333
In a carry, what does it mean to 'lend'?
Lending means selling near and buying far — selling the earlier prompt date and buying the later one.
334
What is the difference between Contango and Backwardation?
Contango is when future prices are higher than spot; backwardation is when future prices are lower than spot.
335
What are the implications of Contango for buyers?
Contango is more expensive for buyers as they pay a premium for future delivery.
336
What does 'ITP' stand for and what does it mean?
ITP stands for 'In The Price', meaning the commission is already embedded in the trade price.
337
What does 'TBB' stand for and what does it indicate?
'To Be Billed' – the commission is calculated separately and added later, often clear in records or back-office systems.
338
What does NCE stand for and how is it calculated?
Net Client Equity = Sum of negative Initial Margin, Variation Margin, outstanding commissions & fees minus the ledger balance.
339
What happens if a client's margin falls below Variation Margin at COB?
It breaks their credit line, prompting a margin call from the credit team.
340
What is the 'Prompt Date' in metals trading?
The date on which the physical delivery or settlement of the metal is due.
341
What is 'Averaging' in QP (Quotational Period) trading?
It's the process of pricing a trade based on an average of daily prices over a defined period to smooth out volatility.
342
What does 'OSA' stand for in clearing accounts?
Omnibus Segregated Account – holds client positions separated from the firm's proprietary positions for regulatory protection.
343
What is the role of Tri-O at Triland?
It’s Triland’s order management system for storing and executing user orders, especially for the 2nd ring close.
344
What is the function of the Order Stack system at Triland?
Used to input and manage the flow of client orders; visible to Account Executives and dealers.
345
What is the function of 'OptVal' at Triland?
A risk management tool used to monitor and evaluate risk exposures, including client strategies.
346
What is 'CM2' used for?
It's an operations trade matching tool that integrates with LMEsmart for clearing purposes.
347
What are non-ferrous metals?
Metals that do not contain iron and are not magnetic, e.g. copper, aluminium, zinc, tin, nickel, lead.
348
What is copper mainly used for?
Electrical wiring, plumbing, telecommunications, and renewable energy technologies.
349
Why is copper demand high?
Due to industrial growth, especially in developing regions like China.
350
What are the biggest producers of copper?
Chile, Peru, China, USA, and Australia.
351
What are some key properties of aluminium?
Lightweight, corrosion-resistant, used in transport, packaging, and construction.
352
What is zinc mainly used for?
Galvanising steel and iron, die-casting for automotive and electrical industries, battery and paint production.
353
What are major zinc producing countries?
China, Peru, Australia.
354
What is nickel primarily used for?
Stainless steel production, alloys, batteries for electric vehicles.
355
What are key uses of lead?
Lead-acid batteries, shielding against radiation, weights, and solders.
356
What is tin used for?
Soldering, plating, and in various alloys.
357
What is the LME?
London Metal Exchange – the world’s premier base metals futures and options exchange.
358
What trading platforms does the LME use?
LME Select (electronic), Ring trading (open outcry), and telephone trading.
359
What is a Ring Dealing Member?
A broker authorized to trade in the Ring, via LMEselect and phone, and clear trades (e.g., Triland).
360
What is the difference between Category 1 and Category 2 LME members?
Category 1 can trade in the Ring; Category 2 can trade electronically and by phone but not in the Ring.
361
What types of clients does Triland have?
Producers, consumers, merchants, hedge funds, and industrial users.
362
What is Triland's role in the market?
A broker and dealer providing trading access, credit lines, hedging strategies, and logistics support.
363
What is a warrant in LME trading?
A title document representing a specific quantity of metal stored in an LME-approved warehouse.
364
What is a carry trade?
Buying and selling the same quantity of metal at different prompt dates to profit from the spread.
365
What is the prompt date?
The agreed date on which delivery or settlement of the trade occurs.
366
What is Initial Margin (IM)?
Collateral required upfront to enter a position, protecting against default.
367
What is Variation Margin (VM)?
Daily gains or losses due to market movement, settled daily to reflect MTM value.
368
What is SPAN?
Standard Portfolio Analysis of Risk – a model used to calculate margin requirements.
369
What is NCE?
Net Client Equity – the equity available to a client after accounting for IM, VM, fees, and commissions.
370
What is TPL?
Trading Position Limit – the sum of a client’s IM and UM credit limits.
371
What does Tri-X do?
Triland’s proprietary trading system for managing and executing client orders.
372
What is Tri-O used for?
Order management for storing and routing Triland client trades, especially around 2nd ring close.
373
What is a 'Tom-Next'?
A carry between tomorrow and the next day, used for short-term adjustments.
374
What is 'Rolling' in metals trading?
Adjusting a position’s prompt date by trading out and back in with different maturities.
375
What is 'Contango'?
Market condition where futures prices are higher than spot prices.
376
What is 'Backwardation'?
Market condition where futures prices are lower than spot prices.
377
What is the difference between 'Borrow' and 'Lend'?
Borrow = Buy near, Sell far; Lend = Sell near, Buy far.
378
What is 'In The Price' (ITP)?
Commission is included in the trade price.
379
What is 'To Be Billed' (TBB)?
Commission is not included in the price and is billed separately.
380
How many clients does Triland serve globally?
Approximately 222 clients across regions including Germany, Japan, Korea, UK, USA, and Turkey.
381
What are the main types of Triland clients?
Producers, consumers, merchants, hedge funds, and financial investors.
382
What kind of products do Triland clients typically trade?
Options, warrants, futures, OTC trades, and physical metals.
383
Who are Triland’s top payers?
Ocean Partners, Marubeni, Kataman, Citic, and Denic.
384
How does Triland classify its clients by rating?
Clients are categorized as Good, Normal, or Worst based on their risk profile and reliability.
385
What is a common practice by Japanese clients regarding margin calls?
They prefer traditional or fax-based methods and avoid complex NCE-related structures.
386
What is a 'Give-Up' trade and how do clients use it?
A trade cleared on behalf of the client by a third party; used for clearing flexibility.
387
Why might clients transfer positions between brokers?
To optimize their credit line usage across brokers or legal entities.
388
What kind of relationships does Triland document for each client?
Through Terms of Business and ISDA agreements.
389
What is the primary use of Copper (Cu)?
High conductivity makes it ideal for electrical wiring, telecoms, and renewable energy infrastructure.
## Footnote
Copper is also used in various other applications.
390
What are the main applications of Aluminium (Al)?
Used in transport (cars, airplanes), construction (frames, panels), and other applications.
## Footnote
Aluminium is lightweight and corrosion-resistant.
391
What is Zinc (Zn) primarily used for?
Mainly used for galvanizing steel and iron to prevent rust, die-casting, brass production, and batteries.
392
What is the significance of Nickel (Ni) in industry?
Essential for stainless steel production and lithium-ion batteries, especially for electric vehicles.
393
What are the key uses of Tin (Sn)?
Used in soldering, plating, electronics, and alloys.
394
What is the primary application of Lead (Pb)?
Mostly used in lead-acid batteries, especially in automotive and backup power sectors.
395
How do FX rates impact trading?
FX rates impact the valuation and conversion of client trades and margin calls.
396
What are the key FX pairs mentioned?
USD/EUR and USD/GBP.
397
What do 3M LME Prices represent?
Benchmark figures used for most client hedging (e.g., Copper, Aluminium, Zinc).
398
What is a common rent rate for Aluminium?
~0.45 USD/mt per day.
399
What platforms are used to monitor daily price moves?
Bloomberg, LMEselect, FastMarkets, and Transmine.
400
What does NCE stand for?
Net Client Equity.
401
What does IM/VM refer to in trading?
IM: Initial Margin; VM: Variation Margin.
402
What is TPL in trading terms?
Trading Position Limit.
403
How are clients rated?
Good / Normal / Worst.
404
Who are the top payers in the market?
Ocean Partners, Marubeni, Kataman.
405
What are warrants in the context of metals?
Titles to metal stored in LME warehouses.
406
What is the contract size for Copper (CU) in LME?
25mt.
407
What is the contract size for Tin (SN) in LME?
5mt.
408
What does the 2nd Ring Close in LME trading refer to?
Execution of many client orders based on price discovery.
409
What are prompt dates in trading?
Dates at which delivery is expected.
410
What is a Bull Spread?
Buy near & low, sell far & high.
411
What is a Bear Spread?
Sell near & high, buy far & low.
412
What is a Bull Call Spread?
Buy a call at a lower strike, sell a call at a higher strike.
413
What is the maximum loss for a Bull Call Spread?
Difference in the two premiums.
414
What is the maximum profit for a Bull Call Spread?
Difference in strikes – difference in premiums.
415
Fill in the blank: A Protective Put is used to hedge _______.
downside risk.
416
What is a Covered Call?
Sell a call while holding the underlying.
417
Why do clients use hedging structures?
To manage price exposure in volatile or uncertain environments.
418
What is the contract size for Copper (CU) on the LME?
25mt
419
What is the contract size for Aluminium (AH) on the LME?
25mt
420
What is the contract size for Zinc (ZN) on the LME?
25mt
421
What is the contract size for Tin (SN) on the LME?
5mt
422
What is the contract size for Nickel on the LME?
6mt
423
What are the LME trading sessions?
1st and 2nd rings and kerb trading
424
What time does the 2nd Ring for Copper start?
12:30
425
What time does the 2nd Ring for Aluminium Alloy & Nasaac start?
12:40
426
What time does the 2nd Ring for Tin start?
12:40
427
What time does the 2nd Ring for Lead start?
12:45
428
What time does the 2nd Ring for Zinc start?
12:50
429
What time does the 2nd Ring for Primary Aluminium start?
12:55
430
What time does the 2nd Ring for Nickel start?
13:00
431
What time does the 2nd Ring for Aluminium Premium start?
13:05
432
What time does kerb trading for Cobalt start?
15:50
433
What time does kerb trading for Aluminium premium alloy & Nasaac start?
15:55
434
What time does kerb trading for Tin start?
16:05
435
What time does kerb trading for Nickel start?
16:15
436
What time does kerb trading for Primary Aluminium start?
16:25
437
What time does kerb trading for Zinc start?
16:35
438
What time does kerb trading for Copper start?
16:45
439
What time does kerb trading for Lead start?
16:55
440
Define Bull Spread in hedging strategies
Buy near & low, sell far & high
441
Define Bear Spread in hedging strategies
Sell near & high, buy far & low
442
What is a Bull Call Spread?
Buy a call at a lower strike, sell a call at a higher strike
443
What is the profit condition for a Bull Call Spread?
Profits if market rises moderately
444
What is a Bear Put Spread?
Buy a put at a higher strike, sell a put at a lower strike
445
What is the profit condition for a Bear Put Spread?
Profits if market drops moderately
446
What is the maximum loss for a Bull Call Spread?
Difference in the two premiums
447
What is the maximum loss for a Bear Call Spread?
Difference in the two premiums – difference in strikes
448
What is the maximum loss for a Bull Put Spread?
Difference in the two premiums
449
What is the maximum loss for a Bear Put Spread?
Difference in the two premiums – difference in strikes
450
What is the maximum profit for a Bull Call Spread?
Difference in strikes – difference in premiums
451
What is the maximum profit for a Bull Put Spread?
NIC (difference in premiums)
452
What is the maximum profit for a Bear Call Spread?
Net premium received
453
What is the maximum profit for a Bear Put Spread?
Difference in strikes – difference in premiums
454
What is the break-even point (BEP) for a Bull Put Spread?
Higher Strike - NIC
455
What is a Protective Put?
Buy a put while holding the physical metal or long futures
456
What is the purpose of a Protective Put?
Used to hedge downside risk
457
What is a Covered Call?
Sell a call while holding the underlying
458
What is the purpose of a Covered Call?
Used to earn premium while accepting capped upside
